Who are you?

My name is Dan Shipper. In 2012 (my sophomore year of college) I started a company called Firefly with some friends. Since that time we bootstrapped our way to the mid-six figures in revenue and are used by thousands of SMBs, financial advisors, and a few huge companies. In July we sold the company to Pega. Read more about the experience here.

This blog has attracted over a half a million readers since I started writing my freshman year of college. You can read about me in:

What is Distilled Thinking?

The problem with writing about entrepreneurship is that it's generally written by two types of people:

1. People who take a practical approach: "It worked for me, therefore it will work for you."

2. People who take an intellectual approach: "There are deep reasons why things should work this way, therefore it will work for you."

The problem with a purely practical approach is that it's generally myopic. It's hard to have a broad, relevant world-view if the only experiences you learn from are your own.

The problem with a purely intellectual approach is that it's very easy to come to wild conclusions that have no bearing on reality but sound good. This kind of armchair entrepreneurship produces books and blog posts with nice-sounding titles, but end up having little long-term relevance.

A term coined by Nassim Taleb, Distilled Thinking is thinking with all of the cruft stripped away.

It's an attempt to see through short-lived trends, and to try to understand how the world works below the surface.

Although I'm not always successful at it, I try to marry a practical and intellectual approach to entrepreneurship to try to tease out the things that happen as I build my company from the ground up. I try to come to cautious conclusions, and make clear the times when I'm unsure, instead of pontificating for page-views.

The other day I had coffee with two friends, we’ll call them Peter and Alex.

Peter is working on a new startup, and Alex runs a large organization. Here’s how Peter pitched what he’s working on:

Peter: So basically I’m working on a startup called W. It does X, Y and Z for large organizations. It’s especially great if you need to organize and respond to lots of support emails.

Alex: Wow, that sounds awesome. We definitely need to respond to lots of support emails for Organization X.

Peter: Yeah, it should be perfect for you guys. Would you pay for it?

Alex: Hmmm, I’m not sure. I’d really have to think about that. I think I’d have to see the product before I could say.

Here Alex is pulling away. Peter senses this and pushes further.

Peter: It could really save you a ton of time though. Think of all the hours you spend answering support emails.

Alex: Yeah, yeah definitely. It’s just I think I have to see the product itself first.

Awkward silence.

Ok, let’s stop and rewind. Where did this pitch go wrong?

The first thing to note, is that Peter is doing the right thing by asking for money.

If you’re in Peter’s position, the only way you’re really going to be able to tell if someone is going to buy your product is if they actually give you their credit card number.

But the thing to be aware of when you’re pitching your startup is that you’re not asking for an early customer’s credit card because you want their money – not really. You’re asking for for their money because it’s an excellent way to elicit useful information: people aren’t polite when money is at stake.

The problem is that when some founders ask for money, instead of using it as a tool to gather feedback, they end up steamrolling the person on the other end. They unintentionally smother the signals that are being given off in the conversation because it feels like the goal is to get the credit card.

To be clear, the goal is not to get a credit card: it’s to get information.

The first sign of trouble was right after Peter asked Alex if he would pay for his product. His response was, “I think I’d have to see the product before I could say.” With a response like that, it’s clear that Alex is pushing off a purchasing decision.

Peter sensed this, but he was in Sell Mode so he pushed further about the potential benefits of his product: “Think of all the hours you spend answering support emails.”

Now Alex feels trapped and antagonized. So instead of doing what Peter wants and agreeing to buy, he just politely pushed him off again by saying, “It’s just I think I have to see the product itself first.”

And after that second attempt the conversation was basically over. Peter learned nothing except that Alex didn’t want to buy his product that day.

But that’s not really useful information is it? What Peter needs to find out is: why didn’t Alex want to buy?

Here’s what should have happened:

Peter: So basically I’m working on a startup called W. It does X, Y and Z for large organizations. It’s especially great if you need to organize and respond to lots of support emails.

Alex: Wow, that sounds awesome. We definitely need to respond to lots of support emails for Organization X.

Peter: Yeah, it should be perfect for you guys. Would you pay for it?

Alex: Hmmm, I’m not sure. I’d really have to think about that. I think I’d have to see the product before I could say.

Here Peter encounters the same resistance as before, but instead of steamrolling over it he decides to find out where it’s coming from. The first thing to check is whether Alex can actually make a buying decision for his organization.

Peter: Gotcha, no problem. So if you were going to buy software like this, what would the process be like?

Alex: Well basically I’d take it to my team and we would discuss it. Fred is in charge of the support side of things so it would really depend on how useful he thinks it is.

Bingo. Now Peter knows that Alex was resisting because he couldn’t even buy the software if he wanted to. Now Peter should find out if there are any other reasons why Alex didn’t want to commit, and also how much his organization might be willing to spend.

Peter: Oh that makes perfect sense. Do you guys use any software that does this already?

Alex: Yeah, we actually bought Zendesk for everyone in the office. It’s about $24 bucks a month per person.

Now Peter knows that he can at least charge $24 bucks a seat. Now he needs to find out more about how they use Zendesk.

Peter: Interesting, how do you use Zendesk right now?

Alex: Glad you asked! I love Zendesk, but there are also some things I wished it had…

Do you see how easy it was to take an antagonistic pitch that lasted 4 minutes, resulted in zero sales, and generated no useful information and turn it in to a long, meaningful, and constructive conversation where both parties are engaged and interested?

Be prepared to listen when people give off subtle signals. Read between the lines. Ask for money because it’s the best way to get useful information, not because you want money.

You give very suggestions on how to sell without selling. Also an upside of actually listening to your clients and potential clients is that you get to build a solid relationship with them because they are not worried that every encounter they have with you is going to be a sales pitch. It all comes down to investing time in getting to know people/their problems and then knowing what solutions they would need. And if your solution/product does not suit the bill, then direct them to something that does.

MFishbein

Totally agree on the importance of asking for money in order to get valuable feedback. People don’t want to disagree with you and tell you your product stinks. It’s uncomfortable. But when there’s money on the line they will. And they’ll start giving you information and feedback that you wouldn’t have heard otherwise: “well, I’m using solution x for this now, and it’s working pretty well,” “I don’t particularly like feature y,” etc.

Ivan Kukard

Let me het this straight, know your client, know his needs and the only way to get to know that is to get him to tell you so that he will buy. Cool, now I am going to re-read this article and apply some of this to my own site. Funny, I already knew all of this but just had to be re-told

Great post Dan (again) and good demonstration of the power of role playing. As has been written before, if I knew what you knew at your age … (sigh).

While getting my MBA, I remember questioning the case method for interviewing — other than to demonstrate a degree of intelligence. However, the ability to ask thoughtful questions that extract more information is critical in a sales environment; especially a B2B market where you are creating a new market or customer segment.

Hearing a no is okay, as long as you learn from it and make it a meaningful discussion.

Congrats on all of your progress; thanks for continuing to write. It’s wonderful material.

scott_mcleod

Nice great post Dan – I think sharing more posts like this with similar situations or dialogs could be really valuable.

http://www.optimonk.com Heréb Krisztina

Dan, I see you didn’t write a thing in almost a year, please don’t do that.. I subscribed to you RSS, and I’m really looking forward to read something from you